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Western Barley Interest Dwindling

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ICE Futures Canada canola contracts moved lower during the week ended March 12, with some of the contracts hitting fresh contract lows. While there were some attempts at short-covering rallies, the bearish influences were much more persuasive. Spillover selling from the losses in soybeans, the large South American crop, expectations for increased canola acres this spring and the strong Canadian dollar were all weighing on canola prices during the week. While there was some chatter about potential business to China, export sources closer to the situation didn’t think there was much fire behind that smoke.

Western barley futures moved higher during the week, but the only real activity in the market consisted of participants continuing the exodus out of the thinly traded futures. Open interest in barley stood at a measly 21 contracts by the end of the week, hinting that the contract could soon be going the way of feed wheat. With the barley cash market holding reasonably steady, market participants are likely seeing little need to hedge themselves in the futures.

In the U. S. markets, CBOT (Chicago Board of Trade) soybeans were down on the week despite updated U. S. Department of Agriculture supply/demand tables that were seen as mildly supportive. The large South American crop and bearish technical signals were behind most of the selling pressure. Soybeans were also hampered by ideas that wet spring weather conditions will lead to more acres going into the crop this year. Corn futures were also down, pressured by slow export demand, expectations for large ending stocks, and chart-based selling. However, the wet weather that could increase soybean acres would be at the expense of corn area, a potentially supportive price influence.

The U. S. wheat market ended the week with a mixed tone. Winter wheat contracts traded in Kansas and Chicago were both lower, while Minneapolis spring wheat futures posted small advances. An ongoing lack of significant export demand was behind the price weakness in Chicago and Kansas. Meanwhile, expectations for reduced spring wheat plantings in both the U. S. and Canada kept the Minneapolis futures supported.

For all of the U. S. markets, the attention is starting to turn away from the large South American soybean and corn crops, which are mostly priced into the market, and toward spring weather conditions. Exports, or the lack thereof, will also be followed closely for direction in soybeans, corn and wheat.


As already mentioned, the big market news of the week was the USDA supply/ demand tables – although attention was quick to turn to other matters, such as newcrop weather conditions.

Some of the key numbers of note in the report include a reduction in the 2009-10 U. S. soybean carry-out forecast to 190 million bushels, from 210 million; an increase in the U. S. corn carry-out to 1.799 billion bushels, from 1.719 billion; and an increase in the U. S. wheat ending stocks estimate to 1.001 billion bushels, the first time that number has been over a billion in 20 years. Adjustments to world supply/demand numbers resulted in increased ending stocks estimates for all three of those crops, with the largest increase in corn.

Agriculture and Agri-Food Canada had its own updated supply/demand tables released during the week, with attention there turning to the 2010-11 crop. The newcrop forecasts may be a little early to set much store by, but the relevant numbers there for Western Canada would be the seeding estimates, pointing to a decrease in wheat, barley and flax – and an increase in canola and oats.

Corn, soybeans and wheat get the bulk of the press in any discussion on U. S. agriculture, with any of the smaller crops that are grown confined to the small print. In Canada the cropping options are much more diversified, and AAFC puts out a whole separate supply/demand report on the pulse and special crops. After canola, lentils appear to be shaping up as a favour-able cropping option for those producers in the lentil-growing areas, despite prices that are well off the levels seen over the past year. In Manitoba, both edible beans and sunflowers could see an uptick in plantings. Across the Prairies, only peas and mustard are expected to see a reduction in acres, and those declines are only marginal at best.


Wheat and canola still make up the bulk of most rotations in Western Canada, but there’s something to be said for the smaller crops. I started thinking about this after a New Yorkbased copy editor called me up regarding the report I wrote on AAFC’s pulse and special crop tables. Her basic question, which no one else in the New York office could answer, was “What’s a pulse?” The question took me slightly aback and had me remembering past questions from copy editors on such foreign concepts as “swathing” and the word centre with the r before the e. There are many things that I don’t know, so I politely answered her question.

However, her followup on what constitutes a special crop was a little trickier. Is there really anything that makes a crop “special” aside from the fact that acres are low? If that’s the case, flaxseed could soon find itself with that moniker as well. There is already a lot less flax grown in the country compared to peas or lentils.

– Phil Franz-Warkentin and Dwayne Klassen write for Resource News International (RNI), a Winnipeg company specializing in grain

and commodity market reporting.

About the author


Phil Franz-Warkentin - MarketsFarm

Phil Franz-Warkentin writes for MarketsFarm specializing in grain and commodity market reporting.

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